The world of NiGHTS brings the dreams of humans to life. Two parts of the dream world, Nightopia and Nightmare, begin to clash when Wizeman begins to steal the dream energy from sleeping visitor. With his newfound power, he creates Nightmaren, nightmarish creatures which include NiGHTS and Reala. Seeing Wizeman's acts, NiGHTS defects and is imprisoned. Eventually, two children free NiGHTS and together they attempt to stop Wizemen and save Nightopia.
NiGHTS: Journey of Dreams follows the same platforming and flying gameplay of its predecessor. New power ups can transform NiGHTS into a dragon, rocket, or dolphin to reach hidden areas. Players can also control one of the children during special platforming levels.